Innovators & Process Improvers

There are essentially two types of companies: innovators and process improvers.

• Innovators create new markets. Think Ipod and Kindle. Creating a product or service for a market without a proven demand involves considerable risk, but with great risk comes great reward. An innovator must create a product with enough forethought to make prohibitive the cost of switching to a competitor offering only marginally more attractive features. A company can also do well to market an otherwise commodity product as an innovation. A tablet PC is ho-hum while an Ipad is an innovation. Brand advertisting is an expression of this same idea. Coke attmempts to convince enough conusmers that it is not competing in the cola market; Coke is a market unto itself. Innovators have a leg-up on competition, but are not excluded from it.
• Process improvers are ruthless competitors in existing markets. Process improvers aim to differentiate themselves through superior quality, rather than by developing ideas first. While there is less risk in attempting to control an existing market, the cost associated with competition can be quite prohibitive. If successful, the return on the investment can be considerable. Wal Mart and Google are process improvers. Wal Mart competes on price and convienience though mastery of supply chain. Google returns consitantly better search results than the competition.

A company or product need not be in only one category. However, if in neither… the faster gazelle who caught the scent early is more likely to survive the lions.

Image credit: Phossil